Commentary: COOL confusion

Does mandatory country of origin labeling (COOL) increase consumer demand for U.S. beef? R-CALF USA believes it does. A recent Kansas State University study indicates it does not. And either way, the World Trade Organization (WTO) says the United States needs to modify the rule by May 23, 2013 to comply with trade agreements.

COOL has returned to the news lately, due to the release of the K-State study and the WTO’s ruling on the deadline.

Back in July, the WTO issued its final ruling in favor of a complaint from Canada and Mexico claiming our COOL rules violate previous trade agreements by according less favorable treatment to imported livestock than to similar domestic livestock. The K-State study found that consumers are largely unaware of the meat-labeling rules, don’t pay much attention to the labels and most do not rely on them for purchasing decisions.

The two documents crossed paths this week when R-CALF issued a news release attacking the K-State study, saying it conflicts with the WTO findings. It is not surprising that R-CALF would stand up for COOL, as the group has supported the mandate all along. It is surprising though, that they would use the WTO ruling to support their position.

Second, R-CALF claims in its release that the WTO ruling means COOL has boosted demand for U.S. beef. "The WTO clearly sided with Canada and Mexico because it found that the demand for imported cattle - and necessarily the beef from imported cattle - was reduced by COOL," says R-CALF USA CEO Bill Bullard. "This is exactly what we expected and intended COOL to do. U.S. cattlemen expected U.S. meatpackers, which are the cattlemen's consumers, to prefer to slaughter U.S.-origin cattle to satisfy the retail customers’ demand for beef that is labeled both with a USDA inspection sticker and a U.S.-origin label.

"If the KSU study is accurate, then the WTO ruling is a sham, and vice-versa,” he adds.

Actually, the two documents do not conflict, because they address different issues. The K-State study surveyed consumers, while the WTO report examined barriers to imports. In its ruling, the WTO writes: “The COOL measure has a detrimental impact on imported livestock because its recordkeeping and verification requirements create an incentive for processors to use exclusively domestic livestock, and a disincentive against using like imported livestock.”

The closest the WTO ruling comes to addressing U.S. consumers is to say “although a large amount of information must be tracked and transmitted by upstream producers for purposes of providing consumers with information on origin, only a small amount of this information is actually communicated to consumers in an understandable or accurate manner, including because a considerable proportion of meat sold in the United States is not subject to the COOL measure's labeling requirements at all.”

So, according to the WTO, packers have processed fewer imported cattle because COOL has made it more difficult and more expensive to do so, not because of consumer preferences. This trend has affected supplies of beef from imported cattle available to consumers. A reduction in supplies of imported beef, caused by upstream challenges and expenses, does not mean consumer demand for imported beef has declined. Nor does it mean consumer demand for domestic beef has improved.